November 12th, 2010
The Red Tape Chronicles/MSNBC
By Bob Sullivan
In New York, a 44-year-old firefighter retires with a $101,000 a year pension, for life. Near Chicago, a parks commissioner quits and begins collecting a $166,000 pension – a sum sweetened by $50,000 thanks to a one-time retirement year windfall of $270,000. And in California, a former city manager pulls down $500,000 in retirement checks every year.
As outrageous as those sunset stipends may seem, they are merely the most visible piece of what critics of generous government pensions say is a ticking time bomb of debt that is threatening to bankrupt a number of states by the end of the decade.
While the federal debt of $13.7 trillion raises issues of devalued currency, higher borrowing costs for Washington, D.C., and loss of international bargaining power, state debt – much of it driven by exploding pension costs – poses a more immediate risk to the U.S. economy, according to many experts.
Wall Street analyst Meredith Whitney correctly predicted the need for a government bailout of banks three years ago, so people listened in September when she forecast who will be next to beg for a federal bailout: States like California, New Jersey and Ohio. State and local governments have effectively run up huge credit card bills, and soon won’t even be able to make the minimum payments on that debt. What happens then? Middle America, Whitney predicted in a report called “Tragedy of the Commons,” might revolt at the idea at bailing out coastal states for years of mismanagement and overspending.
Crushing debts racked up by these and other states are obvious almost every budget year, when state government shutdowns are threatened and tax increases loom. But annual budget woes are a drop in the bucket compared to long-term obligations facing these states – particularly their promises to supply pensions and health care to millions of retired workers. Pension talk might not sound sexy, but it should: U.S. states already are short $1 trillion they should have set aside to pay retired workers, according to the Pew Center on the States. That hole could very well drive states to bankruptcy or federal bailout.
As documented in our continuing series on supersized government worker pay, granting supersized pensions seems irresponsible in light of this looming fiscal catastrophe. Yet, in California alone, nearly 10,000 retirees will get pension checks totaling at least $100,000 this year.
The economic struggles of the past decade lit the fuse for the pension fund time bomb. In 2000, half of the 50 states had enough money socked away to cover future pension costs, according to Pew. By 2008, only four states -- Florida, New York, Washington and Wisconsin -- could make that claim. The other 46 are potentially on the road to insolvency.
The pension doomsday clocks in Illinois and New Jersey will strike even sooner, in 2018, he said.
What happens then? In New Jersey, for example, the state is obligated to pay pensions out of the general fund when the pension fund runs dry. In 2018, the state will owe $14 billion in pension payouts, or one-third of the state's annual tax receipts. To put that in perspective, to plug a budget hole like that this year, the state would have to cut all education spending. That bears repeating: It would have to eliminate spending on every elementary school, high school and college from its budget.
That's why stories of $195,000 pensions, rampant double-dipping, workers collecting pensions on seven, eight or even nine government jobs, and other excesses seem so absurd. (Read Full Article "Super-sized Pensions
November 12th, 2010
New York Times
By Sewell Chan and Sheryl Gay Stolberg reported from Seoul, and David E. Sanger
SEOUL, South Korea — President Obama’s hopes of emerging from his Asia trip with the twin victories of a free trade agreement with South Korea and a unified approach to spurring economic growth around the world ran into resistance on all fronts on Thursday, putting Mr. Obama at odds with his key allies and largest trading partners.
The most concrete trophy expected to emerge from the trip eluded his grasp: a long-delayed free trade agreement with South Korea, first negotiated by the Bush administration and then reopened by Mr. Obama, to have greater protections for American workers.
And as officials frenetically tried to paper over differences among the Group of 20 members with a vaguely worded communiqué to be issued Friday, there was no way to avoid discussion of the fundamental differences of economic strategy. After five largely harmonious meetings in the past two years to deal with the most severe downturn since the Depression, major disputes broke out between Washington and China, Britain, Germany and Brazil.
Each rejected core elements of Mr. Obama’s strategy of stimulating growth before focusing on deficit reduction. Several major nations continued to accuse the Federal Reserve of deliberately devaluing the dollar last week in an effort to put the costs of America’s competitive troubles on trading partners, rather than taking politically tough measures to rein in spending at home.
The result was that Mr. Obama repeatedly found himself on the defensive. He and the South Korean president, Lee Myung-bak, had vowed to complete the trade pact by the time they met here; while Mr. Obama insisted that it would be resolved “in a matter of weeks,” without the pressure of a summit meeting it was unclear how the hurdles on nontariff barriers to American cars and beef would be resolved.
Mr. Obama’s meeting with China’s president, Hu Jintao, appeared to do little to break down Chinese resistance to accepting even nonbinding numerical targets for limiting China’s trade surplus. While Lael Brainard, the under secretary of the Treasury for international affairs, said that the United States and China “have gotten to a good place” on rebalancing their trade, Chinese officials later archly reminded the Americans that as the issuers of the dollar, the main global reserve currency, they should consider the interests of the “global economy” as well as their own “national circumstances.”
The disputes were not limited to America’s foreign partners. Treasury Secretary Timothy F. Geithner got into a trans-Pacific argument with one of his former mentors, Alan Greenspan, the former chairman of the Federal Reserve, after Mr. Greenspan wrote that the United States was “pursuing a policy of currency weakening.” Mr. Geithner shot back on CNBC that while he had “enormous respect” for Mr. Greenspan, “that’s not an accurate description of either the Fed’s policies or our policies.” He added, “We will never seek to weaken our currency as a tool to gain competitive advantage or grow the economy.”
Much of the rest of the world seemed to share Mr. Greenspan’s assessment. Moreover, Mr. Obama seemed to be losing the broader debate over austerity. The president has insisted that at a moment of weak private demand, the best way to spur economic growth is to have the government prime the pump with cheap credit and government stimulus programs. He quickly found himself in an argument with Prime Minister David Cameron of Britain and Chancellor Angela Merkel of Germany.
“You do hear the argument made sometimes: If you have a deficit, put off the action to deal with it because taking money out of the economy will reduce your growth rate,” Mr. Cameron said at the meeting. “I simply don’t accept that.” Even as he spoke, back home his ministers were announcing new cuts in Britain’s famed welfare system.
Mrs. Merkel, reflecting a more traditional German view born of her country’s history of hyperinflation before World War II, was equally adamant. “I am not one, and Germany is not one, who says growth and fiscal consolidation are contradictory,” she said during a lunchtime address in Seoul. “They can go together, and it is essential to return to a sustainable growth path.”
She also suggested that it was the job of deficit countries — like the United States and Britain, though she diplomatically avoided citing them — to increase their competitiveness rather than put limits on countries that had figured out how to get the world to buy their goods. “In the task ahead, the benchmark has to be the countries that have been most competitive, not to reduce to the lowest common denominator,” she said.
The differences with Mr. Cameron and Mrs. Merkel were particularly striking because during Mr. Obama’s first Group of 20 meetings — in London, Pittsburgh and Toronto — he managed to get all of the major economies to pursue something of a coordinated stimulus strategy.
But that consensus began fracturing at the June meeting in Toronto. While the administration had warned that rolling back fiscal stimulus programs too quickly could endanger the fragile recovery, the pressure on European nations to slash their deficits was becoming overwhelming. Ultimately the Group of 20 countries committed to cutting government deficits in half by 2013, a goal the United States insists it will meet. But much has now changed. Mr. Cameron is following his conservative instincts and has made budget-cutting a signature issue. Mrs. Merkel is credited with avoiding spending heavily on stimulus programs and emerging with the most successful recovery in Europe.
And Mr. Obama faces new political constraints. Jeffry A. Frieden, a political scientist at Harvard, noted Thursday that the administration “feels it does not have the domestic political support for embarking on potentially difficult cooperative measures.”
The White House decided it was smarter for Mr. Obama to return home with no free trade accord than with one in which it could be accused of making concessions at a time that the consensus on trade has been shattered, particularly within the Democratic Party.
Similarly, accusations that China has manipulated its currency for its own advantage — and now the countercharge that the Fed is doing the same — are part of what Mr. Frieden calls an argument over “who will bear the burden of adjustment.”
“Will it be the creditor or debtor countries?” he said. “Who’s going to take a hit for our debt?”
Indeed, the struggle for advantage, which ultimately may be a struggle to set the rules for a new global financial order, was the unspoken subtext of the meeting between Mr. Obama and Mr. Hu.
Mr. Hu, in the most indirect terms, told Mr. Obama that Beijing was focused on the Fed’s role in pushing down interest rates, and its effect on weakening the dollar. The code words were obvious. For days Chinese officials have characterized the Fed’s actions as an effort to drive “hot money” to developing nations, pushing up their currencies and their interest rates, and perhaps fueling inflation. Mr. Obama had hoped to make the meeting about a related subject: China’s continuing refusal to allow rapid appreciation of its currency, which fuels its huge trade surplus.
At a press briefing in Seoul, Zheng Xiaosong, director general of the Chinese Ministry of Finance’s international department, indirectly accused the United States of ignoring its international responsibilities. “The major reserve-currency issuers, while implementing their monetary policies, should not only take into account their national circumstances but should also bear in mind the possible impacts on the global economy,” he said.
More From The New York Times
November 12th, 2010
INDIANAPOLIS – Cartoonist Jim Davis apologized Thursday for a Garfield strip that some veterans may have found offensive.
The strip ran on Veterans Day in newspapers across the country. It shows a spider daring the pudgy orange cat to squash it. The spider tells Garfield that if he is killed, "they will hold an annual day of remembrance in my honor."
The final panel shows a spider-teacher asking its students if they know why spiders celebrate "National Stupid Day."
Davis, of Muncie, Ind., said in a statement posted on his website that he didn't know the strip would appear on Veterans Day. He said it was written nearly a year ago and called the publication Thursday "the worst timing ever."
"It absolutely, positively has nothing to do with this important day of remembrance," Davis said.
John Raughter, a spokesman for the Indianapolis-based American Legion, looked at the strip and Davis' statement after the cartoon was brought to his attention by a reporter. He said an apology wasn't necessary.
"We have no reason to doubt his explanation of what happened," Raughter said.
Davis said his brother served in Vietnam, and his son is a Marine who has served in Iraq and Afghanistan. He said he is grateful for the service of veterans, and called any offense "unintentional and regrettable."
November 11th, 2010
The Examiner By Barry Secrest
By Barry Secrest
To this we would point out that Jihad did, indeed, take down the twin towers while turning the entire world into a boiling cauldern of strife, so most of us have a very clear understanding of what that particular word actually means. Back on the Mainland again, we have members of the President's staff now actually seeming to suddenly commiserate on the tax extensions after swearing against them for an entire year, and talking amiably about the Tea Party, stating that here is much that they and Obama can agree upon.
To a large number of us who have been focusing with alarm, upon all of the strange goings-on within our Government for the past nearly two years, we wonder if The President might be playing the Matador instead of the cape at this juncture.But one thing is for certain, short of something highly unusual occurring in the whispered halls of Government and on high, Obama's tone of the past makes it difficult to imagine a move to the center. However a feint to the center, on the other hand, might be more in keeping with the President's command of all things appearing to be not exactly what they seem.
You see, the one thing that few still wish to talk about is simply the ideology of the man we now call our President. Politicians in power, the Mainstream Media, even certain Conservatives are often afraid to discuss in public discourse the beliefs and ideologies which have driven both Obama and the US economy into a morass of confused indications. This fear is most likely rooted within a hesitancy to stir up the ruling elites and the media. However, there are many others who have come out from day one and pointed to Obama's veiled history, noting that something was, indeed, amiss.
Read More Conservative Refocus "Lite" At The Examiner: Atlas Stirs